ESG ETF trendsMark Montgomery
- disinformation disseminated by an organisation so as to present an environmentally responsible public image.
“while they can be useful, these sorts of standards are sometimes used quite cynically—as corporate greenwash”
There is a difference between what people say and what they do. Companies are realising the importance of actions speaking louder than words and are beginning to focus on changing behaviours not just the “Values” statement on their website.
Investments are no different as can be seen in our analysis today. Investment in companies with strong Environmental, Social and Governance (ESG) mandates are already being grouped together by ETF issuers to facilitate easier investment in ready-made portfolios of socially responsible companies.
We have taken a look at these ESG ETFs and the trend is clear. The first chart shows the growth in secondary market share, and the second chart shows the growing number of ETF instruments trading in the segment and as a whole.
Over the last two years, through a combination of a growing number of ETF listings and increasing trading activity on those ETFs, we see activity in the ESG category in European ETFs growing from zero to 11% of turnover.
Having the insight into which issuers are following which underlying ESG benchmark can help investors, traders and issuers identify trends and confirm “hunches” with real data. Then the comparison of liquidity and market quality for the competing underlying funds across venues and trading platforms can begin.